Ministers are under mounting pressure to further extend the Government’s £2bn scheme to tackle youth unemployment despite throwing it open to more employers today.

The Kickstart scheme, which offers paid six-month placements to 16 to 24-year-olds claiming universal credit, was launched in November after being unveiled by the Chancellor, Rishi Sunak, last July.

More than 120,000 placements from 6,500 employers have been approved by the Department for Work and Pensions since the scheme opened but only around 2,000 young people have started so far due to the impact of the second wave of the virus.

The department has scrapped the requirement for individual employers to offer a minimum of 30 placements to encourage more small businesses to sign up.

But despite the number of universal credit claimants more than doubling to 516,000 since the pandemic struck, the scheme is due to close to new applications at the end of the year.

Tony Wilson, director of the Institute for Employment Studies, said: “The Government needs to extend it by at least another six months in my view – not least because the peak of long-term unemployment for young people may well be in 2022 rather than 2021.”

Stephen Timms, chairman of the work and pensions select committee, also said Kickstart could be extended in scope to cover young people claiming other benefits, or no benefits at all, who are currently excluded. “That’s something I would ask the department to have a look at,” he said.

Employment minister Mims Davies said the department would take a “pragmatic” approach and keep the scheme under review.

When the scheme was created last year, Mr Sunak said he wanted to prevent an entire generation being “left behind” amid fears that the pandemic could trigger mass unemployment.

For each job through the Kickstart scheme, the Government commits to covering the cost of 25 hours’ work a week at the national minimum wage – £4.55 for under-18s, £6.45 for 18 to 20-year-olds and £8.20 for 21 to 24-year-olds.

The Government is hoping to create “hundreds of thousands” more new job placements before the scheme’s closure at the end of the year.

Mr Sunak said: “Young people are among the hardest hit in times like these, which is why we’re doing everything we can to ensure they’re not left without hope and opportunity. With £2bn available and no limit on the number of places, it’s now easier than ever for businesses to take part.”

Business leaders urged the Government to focus its immediate attention on clearing the backlog of approvals needed for placements already in the system before processing new applications. The aim of Kickstart is to support a quarter of a million 16 to 24-year-olds on universal credit back into work.

Employers are paid £1,500 per post in set-up costs and it then covers 100pc of the minimum wage for 25 hours a week for a total of six months, plus national insurance contributions.

If firms want to pay more than minimum wage or pay for more than 25 hours, they can top this up.

• Read more: Experts urge Sunak to expand Kickstart scheme